Convex Finance – CVX is a DeFi protocol built on top of the decentralized exchange Curve Finance. The platform offers additional rewards for Curve liquidity providers and stakers as well as a boosted APY.
Convex – CVX is a platform that allows Curve’s liquidity providers (LPs) to earn boosted rewards without locking in their CRV tokens.
We briefly summarize how Curve works.
Curve Finance is a decentralized exchange that offers stablecoins or similar crypto pairs with low impermanent loss to its liquidity providers.
Liquidity providers (LP) are rewarded with CRV tokens that can then be locked (max 4y) in exchange for veCRV (Voted-escrow Curve), which provides various benefits to the holder.
The principle applies; The longer and more CRV locked, the more income and the higher the APY boost.
Convex provides the maximum boost to anyone who deploys their Curve LP tokens on the platform. Regardless of the number of tokens and with the option to withdraw at any time.
Convex Finance is targeting Curve users, consisting of Curve liquidity providers (LP) and CRV stakers. It will offer additional rewards for any CRV participant who secures their tokens on the platform.
Users can deposit Curve’s LP tokens in the Convex protocol.
When you deposits into one of the Convex Curve liquidity pools, you’ll get Convex LP tokens that offers;
The APY boost is provided by Convex by building a group position which increases the total rewards.
Convex is not only offering additional rewards for Curve LPs, it will offer them for CRV token holders.
For example, CRV holders don’t have to lock their CRV in exchange for veCRV (Voted-escrow CRV), that gives them a portion of Curve transaction fees, governance and potentially airdrops.
Consequently, CRV holders can stake their tokens into Convex in exchange for cvxCRV tokens.
cvxCRV tokens offer:
It is important to note that when you stake CRV tokens on Convex, the proces is irreversible.
Leaving the Convex ecosystem can be done through exchanging your cvxCRV through the cvxCRV/CRV pool.
The Convex Finance team consists entirely of anonymous developers. Nevertheless, on April 23, 2021, the project was whitelisted by the Curve team and its users.
For a detailed explanation of how the Convex protocol works, please refer to the whitepaper.
2 different tokens are characteristic for the Convex platform:
Stands at 1:1 ratio for each locked CRV on Convex. It can be staked to receive platform fees(CRV), CVX, and veCRV rewards. As Convex platform revenue increases, more value will be distributed to cvxCRV holders.
Convex’s own token, which can be staked to receive a portion of platform fees (cvxCRV). Can also be used for voting for future platform changes.
CVX/CRV ratio reduces every 100k locked CVX
More info here.
Max supply: 100 million
cvxCRV can be staked on Convex in exchange for receiving the transaction fee that one would receive for deploying veCRV.
Stakers also receive additional CVX fees.
Users can also earn by choosing to provide liquidity in the cvxCRV/CRV or CVX/ETH liquidity pool on Sushiswap.
Sushi LP (SLP) tokens can be staked on Convex Finance for CVX rewards.
Convex – CVX can be bought and sold on decentralized exchanges, including;
cvxCRV/CRV can only be bought and sold on;
More explanation here.
After just a few weeks, Convex Finance’s Total Locked Value exceeded $1 billion. Currently, it is around $6 billion TVL, a huge growth as a result of Curve’s popularity. For now, Convex is only deployed on Ethereum mainnet.
Newcomers, coming to the space, can be confused by all the complex elements of Curve Finance.
Convex Finance tries to make participation easier by embodying the money lego aspects of DeFi.
By participating in the Curve ecosystem as a group, Convex can deliver better returns compared to what a single user could do on their own. The more people see the potential of Curve Finance, the bigger Convex Finance will grow
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